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One bankruptcy case filed so far this year
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Posted on Apr 17 2006
The first bankruptcy petition this year was filed in the U.S. District Court for the NMI last week, Saipan Tribune learned yesterday.
District Court records show that a woman filed a Chapter 7 petition.
Under Bankruptcy Chapter 7, most assets of the debtor are liquidated as quickly as possible to pay off creditors to the extent possible and to free the debtor to start anew.
From January to April last year, at least two bankruptcy cases were filed in federal court.
Bankruptcy cases filed in federal court had soared to an all-time high of 31 in 2005. This number topped the 25 cases that were registered in 2001 and 2002. The 2005 petitioners were all individuals who filed Chapter 7 bankruptcy cases.
Many individuals filed the petitions because of the effectivity of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a law that increases filing fee and makes the petition more stricter, among other things. It was passed for the benefit and relief of creditors and debtors in cases in which the latter are unable or unwilling to pay their financial obligations.
In New York, during the first quarter of 2006, Chapter 7 bankruptcy filings reportedly exceeded the Chapter 13 filings, which require repayment. Analysts attributed the new trend to the changes made in bankruptcy laws.
Bankruptcy cases in the Commonwealth began to soar in 1998 after the CNMI was affected by economic crisis that struck Asia. From 18 in 1998 the record rose to 23 in 2000.
